Novak Djokovic finished the year as he began it, a champion, and, with only the quietest protestation from his nearest rivals, perhaps, he is once more ruler of the tennis jungle.

In a final worthy of a grand slam championship, the player who began 2012 in the longest final in the history of the majors to win the Australian Open, overcame a slow start to beat Roger Federer – from whom he recently took back the mantle of world No1 – 7-6, 7-5 in a tick under two and a quarter hours to win his second ATP World Tour Finals title.

This is the tournament that brings together the eight best players in the world and not even the absence of Rafael Nadal – ranked at No4 despite his worryingly long rehab to rest injured knees – could cheapen Djokovic's achievement. Despite the distraction of worrying about his ailing father and a low-key start to the week, he prevailed when it mattered.

"My father had a fight of his own [a chest infection]," the winner said. "It was touch and go the past couple of weeks but he is much better now. I won this for him."

For Federer, it was "a great match", despite twice blowing handy leads. "I couldn't have played much better but it doesn't matter; you still have to get over the line. He was the better man today. Even in defence, he stays on the offensive and that is what separates him from the rest."

This was only the fourth time since the inception of the season-ending format in 1970 that the world's two top-ranked players had contested the title. Federer has played eight different opponents in eight finals and was reaching for his seventh prize, so he might feel he has been publicly burgled of his personal property.

The year-on-year war between the top four shows little sign of abating. Together, they won 14 of the 15 biggest titles on offer this year, with a different champion in each major. Djokovic won his 75th match of the season here to secure his sixth tournament victory of 2012. Andy Murray, who lost to both of the finalists this week, is only a clipped net cord behind both finalists, having beaten Federer for Olympic gold and Djokovic for the US Open title in what will be remembered as his breakthrough year.

What Federer did to Murray in the first set of their semi-final on Sunday night, Djokovic did to the Swiss last night, except at a higher level. After the Serb had shaken off his lethargy in the first three games, he produced a blizzard of winners, several quite brilliant ones. None was more breathtaking, though, than Federer's to make it 6-6 in the tie-break.

Maybe 10 feet from the net and pushed wide, he left his reply desperately and intentionally late – all the better to deceive – and, taking the ball behind him, skimmed the net with the latest of late forehands at an unreachable angle. Djokovic, stranded, could do no more than shake his head at the audacity of it.

Djokovic, working behind a decent second serve, then slammed his forehand crosscourt with precision to take a set he had looked almost certain to lose an hour earlier.

Federer opened the match with an ace and took 12 points in a row to lead 3-0, as the Serb slumbered. He fought through three deuce points to hold in a game that lasted a quarter of an hour then broke immediately with a withering backhand for parity on serve.

As they settled into an enthralling duel, the standard hit a peak appreciated without prejudice among the 17,000-plus fans; after the outbreaks of Fed-love on key points in the Murray match, there was nothing but celebration of every rally and winner on Monday night: Greenwich turned into neither Partisan Belgrade nor Basel-by-the-Thames. Shot after glorious shot lit up the arena (as did a video camera light directly behind Djokovic's arm for fully five minutes).

Djokovic dropped serve at the start of the second set and Federer cruised to 4-2 with every prospect of levelling. After Djokovic missed the tramlines with a forehand of blinding simplicity, Federer pulled ahead 5-3.

In yet another twist, he blew two set points at 5-4 and Djokovic took his one break point with a superbly placed forehand in the deuce corner.

Struggling, Federer gifted him match point with a loose backhand and the Serb grabbed the title with the most majestic forehand passing shot to leave his opponent helpless at the net.